Over the last year, the economy’s wheels have come off in a big way – and the country’s central bank might be to blame.
Although steep market declines can be frightening, especially when they are caused by the Fed changing tack, they are typically the ideal moment to invest. That’s because a bull market surge always compensates for any significant drops.
The following are two of the most intelligent stocks to buy in a Fed-fueled bear market.
Berkshire Hathaway
Berkshire Hathaway is a good first stock for investors to buy during a Fed-given bear market.
Although Berkshire may not be well-known outside the business world, its CEO, Warren Buffett, is undoubtedly familiar. Since taking charge of the firm in 1965, Buffett has generated over $760 billion in value for shareholders (himself included), and he’s steered Berkshire’s Class A shares to an average yearly return of close to 20%. We’re talking about a gain of 4.2 million percent combined as of April 7.
Buffett has invested in firms that are cyclical, which is one of his less-known methods to success. These are businesses that prosper during economic booms and suffer during recessions. Buffett has positioned Berkshire Hathaway and its money portfolio to take advantage of long-term expansions rather than attempting to time these inevitable downturns. After all, the economy expands for a lot longer than it shrinks.
Walgreens Boots Alliance
Pharmacy chain Walgreens Boots Alliance is another exceptionally clever investment to make during a Fed-induced bear market.
Healthcare companies are generally resistant to wild swings in the stock market, as well as fluctuations in the US economy. Because we can’t change when we become ill, there’s always a need for medical devices, prescription drugs, and healthcare services.
However, during the early phases of the COVID-19 pandemic, Walgreens was an exception to this rule. Because pharmacy chains are largely dependent on foot traffic into their stores, the outbreak harmed them for a few quarters. Regardless of what the country’s central bank does with interest rates, Walgreens appears well-positioned to shine no matter where it goes from here.
The fact that Walgreens Boots Alliance has a multipoint strategy to improve its margins and organic growth rate makes it an appealing investment. For example, Walgreens has reduced more than $2 billion in annual operational expenditures ahead of schedule. At the same time, the company has invested heavily in digitization efforts to promote direct-to-consumer sales. Even though its physical locations will continue to be its major source of income, online purchases should have no trouble increasing the company’s organic growth rate.
Now is the ideal moment to acquire Walgreens, which is valued at just nine times Wall Street’s forecast earnings for 2022 (ended August 31, 2022).
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